Q4 and FY 2015 Financial Results May 20, 2015 Lee D. Rudow John J. Zimmer Sr. Vice President of Finance and CFO President and CEO
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact and thus are subject to risks, uncertainties and assumptions that often are identified by words such as “expects,” “estimates,” “projects,” “anticipates,” “believes,” “could,” and other similar words. All statements addressing operating performance, events, or developments that Transcat, Inc. expects or anticipates will occur in the future, including but not limited to statements relating to anticipated revenue, profit margins, sales operations, capital expenditures, growth strategy, potential acquisitions, customer preferences and changes in market conditions in the industries in which Transcat operates are forward-looking statements. Forward-looking statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Transcat’s Annual and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the Company’s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on the Company’s forward - looking statements. Except as required by law, the Company disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this presentation. 2
Fourth Quarter Execution Record revenue of $32.3 million • Service segment record revenue of $14.5 million, up 7.5% • 24 consecutive quarters of year-over-year Service segment revenue growth • Distribution sales up 5.5% to $17.9 million Strong operating leverage • Service segment operating margin expanded 400 basis points to 15.2% Cash generation • Consolidated Adjusted EBITDA* of $4.0 million, an increase of 6.9% * See supplemental slides for Adjusted EBITDA reconciliation and other important disclaimers regarding Adjusted EBITDA. 3
Record FY 2015 Performance Record annual revenue of $123.6 million, up 4.3% • 11 th consecutive year of revenue growth • Service segment revenue increased 7.5% to $51.8 million • Distribution sales up 2.1% to $71.8 million Cash generation and bottom-line performance • Consolidated Adjusted EBITDA* of 10.3 million, an increase of 2.1% • Achieved net income of $4.0 million Acquisitions • Ulrich Metrology Inc. and Apex Metrology Solutions Growth-focused investments • $3.5 million in CapEx • Expanded Service capabilities, launched new website and C3 Metrology Management Software * See supplemental slides for Adjusted EBITDA reconciliation and other important disclaimers regarding Adjusted EBITDA. 4
Top-line Growth ($ in millions) 7.9% CAGR* Consolidated – Annual Q4 Service Segment $14.5 $123.6 $118.5 $112.3 $13.5 $110.0 $91.2 $51.8 $48.2 $36.4 $40.7 $31.3 $73.6 $71.6 $71.8 $70.3 $59.9 Q4 FY 2014 Q4 FY 2015 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Service Distribution • Record quarterly and annual Service Q4 Distribution Segment segment revenue $17.9 $16.9 – Driven by organic & acquisition growth • Distribution segment remains highly competitive – Fourth quarter growth due to alternative Q4 FY 2014 Q4 FY 2015 energy customers *FY 2011 – FY 2015 All figures are rounded to the nearest million. Therefore totals 5 shown in graphs may not equal the sum of the segments.
Operating Income and Margin ($ in millions) 10.2% CAGR* Consolidated – Annual Q4 Service Segment $6.8 $6.7 $5.9 $5.4 $2.2 $4.6 $2.4 $(0.2) $1.3 $1.5 $3.7 $0.2 $4.4 $5.6 $4.6 $4.3 $3.1 4.5% 1.3% 15.2 % 11.2% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Q4 FY 2014 Q4 FY 2015 Service Distribution Q4 Distribution Segment • Q4 Service operating margin expanded 400 basis points $1.4 • Annual Service operating income $0.9 surpassed Distribution segment • Q4 Distribution gross margin impacted 8.4% 5.1% 220 bps by lower vendor rebates Q4 FY 2014 Q4 FY 2015 *FY 2011 – FY 2015 All figures are rounded to the nearest million. Therefore totals 6 shown in graphs may not equal the sum of the segments.
Contribution Margin* and % of Revenue ($ in millions) 7.1% CAGR** Q4 Service Segment Consolidated – Annual $3.2 $15.8 $15.2 $14.4 $2.6 $13.4 $11.5 $6.1 $3.2 $5.2 $7.5 $3.1 $10.2 $9.6 $9.2 $8.5 $7.7 11.5% 8.5% 21.8% 19.1% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Q4 FY 2014 Q4 FY 2015 Service Distribution Q4 Distribution Segment • 25.3% CAGR for Service segment $2.7 (FY 2011 - FY 2015) • $1.9 Cost discipline and lower performance- based compensation expense helped to partially offset Distribution gross 15.8% 10.8% margin pressure Q4 FY 2014 Q4 FY 2015 * See supplemental slides for Contribution Margin calculation and other important disclaimers regarding Contribution Margin. **FY 2011 – FY 2015 All figures are rounded to the nearest million. Therefore totals shown in graphs may not 7 equal the sum of the segments.
Adjusted EBITDA* and Margin ($ in millions) 9.7% CAGR** Q4 Service Segment Consolidated – Annual $2.8 $10.3 $10.0 $8.8 $8.9 $2.0 $7.1 $2.0 $4.6 $3.1 $6.1 $1.8 $6.8 $5.8 $5.3 $5.4 $4.1 15.0% 19.5% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Q4 FY 2014 Q4 FY 2015 Service Distribution Q4 Distribution Segment • Service segment up nearly 40% $1.7 quarter over quarter $1.1 – Margin expanded 450 basis points • 36.5% CAGR for Service segment 6.4% (FY 2011 - FY 2015) 10.0% 7.8% 0.0% Q4 FY 2014 Q4 FY 2015 * See supplemental slides for Adjusted EBITDA reconciliation and other important disclaimers regarding Adjusted EBITDA. **FY 2011 – FY 2015 All figures are rounded to the nearest million. Therefore totals shown in graphs may not 8 equal the sum of the segments.
Bottom-line Performance ($ in millions) Quarterly Net Income Annual Net Income $4.0 $4.0 $1.9 $3.7 $3.3 $1.7 $2.8 5.9% 5.6% 3.4% 3.3% 3.3% % of 3.1% 3.0% Revenue FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Q4 FY 2014 Q4 FY 2015 EPS $0.24 $0.27 $0.37 $0.43 $0.49 $0.54 $0.57 • 9.6% CAGR for net income (FY 2011 - FY 2015) 9
Balance Sheet Supports Growth Strategy ($ in millions) Long Term Debt $12.2 • $16.0 million in availability under $8.0 $7.6 revolving credit facility $5.3 $3.4 • FY 2015 CapEx focused on service capabilities and IT upgrades FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 • FY 2016 CapEx to focus on increasing lab capabilities and capacity; Also includes additional assets for rental business Capital Expenditures • Financial flexibility to facilitate $4.0 $3.5 acquisition strategy, satisfy working $2.7 capital and capital expenditure needs $2.0 $1.6 $1.4 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Est* * FY 2016 capital expenditure guidance provided as of May 19, 2015 10
Generating Cash to Drive Key Investments Historical Trailing 12 Month Key Investments and Current Quarter Debt Balance ($ in thousands) $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Capital Spend Acquisitions Shares Repurchase Current Quarter Ending Debt Balance 11
FY 2016 Outlook* • Expect double-digit Service segment revenue growth − Leverage recent acquisitions and investments such as the new website and C3 software − Continue to develop and grow Service pipeline, particularly in the Healthcare space • Expect Distribution sales growth in the low single digit range − Capture Distribution market share by expanding product lines and introducing innovative product bundles • Continue to evaluate service market acquisition opportunities Consolidated operating income growth in the mid-teens * FY 2016 outlook and guidance provided as of May 19, 2015 12
Upcoming Investor Relations Calendar Late July Q1 FY 2016 Earnings Sep 9 Annual Meeting 13
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